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France moves to restrain Amazon’s free shipping offers

January 9, 2014 01:06 PM

French senators yesterday unanimously passed a bill that would prohibit online book sellers from shipping books for free to consumers in France.

The new legislation is designed to help independent booksellers in the country better compete with e-retailers, in particular Amazon.com Inc., which the bill’s sponsors call “a competitor out of the ordinary by its financial strength and aggressiveness of its business strategy.”

The National Assembly, the country’s lower legislative body, already has approved the bill. The French president, François Hollande, still must sign it into law. Hollande has expressed that he is in favor of the bill, according to reports.

Amazon did not immediately respond to a request for comments.

Thanks to an act passed in 1981 known as the “Lang Law,” both physical and online retailers in France have been able to offer up to a 5% discount on the publisher’s list price for a book. However, e-retailers that also offer free shipping—as Amazon.com does via its Prime two-day shipping program and when a shopper’s order exceeds a set amount—give consumers an extra incentive to shop online, according to the bill. Removing that e-retailer-only benefit will help level the playing field for all book sellers in France, backers argue.

The bill came before the National Assembly in June 2013. It is a briefly amended version of the Lang Law: Two additional sentences explicitly describe the ban on e-retailers shipping books for free and clarify that all retailers are still able to offer up to a 5% discount off publishers’ prices.

In the bill’s introduction, the French senators write that their motivation to update the law now comes from “alarming” statistics on independent book store closures and sales declines over the last several years. Specifically, they cite a 10% year-over-year decrease in the sale of books at French independent stores in November 2013 and data showing that Amazon commands 70% of the book market in France.

According to the French Ministry of Culture and Communication, France’s book market is the second-largest in Europe and the fifth-largest worldwide. In 2011, the total value of physical and digital books sold in France was 5.6 billion euros ($7.6 billion today), the Ministry says. Of those sales, e-commerce accounted for 15% and independent book stores accounted for 24%—which, though higher than e-commerce, represents a decline from 28.5% in 2003. The rest of the sales were from cultural organizations, book clubs, kiosks and other outlets, such as large retail chains.

Books, music and videos is the fastest-growing category in the 2013 Europe 500 Guide, which ranks online retailers in Europe by their annual web sales. In 2012, the 36 retailers in that category—excluding Amazon.com Inc., which ranks No. 1 in the guide overall but is categorized as a mass merchant—had combined web sales of roughly 2.96 billion euros ($3.87 billion), up 35.7% from 2.18 billion euros ($2.85 billion) in 2011. Those retailers also accounted for 3.2% of total e-retail sales in Europe in 2012, according to the guide.